Sheiman Ultrasonic Research Foundation Pty Ltd v Novapharm Research

REASONS FOR JUDGMENT 1 Before me are applications by the respondents to dismiss this proceeding with costs pursuant to O 35A r 3(1)(a) of the Federal Court Rules which relevantly provides that if an applicant is in default, the Court may order that proceedings be stayed or dismissed as to the whole or any part of the relief claimed. 2 A party is in default under O 35A r 2(1)(a); (f) if, inter alia, it fails to prosecute the proceeding with due diligence. 3 The first to eighth respondents filed a Notice of Motion on 14 November 2008, which was served on the applicants on 17 November. The Notice of Motion of the ninth respondent (Baldwin Shelston) was filed on 13 November 2008.

background 4 The proceeding has a lengthy history which is as follows. On 14 December 2007 the applicants filed and served an Application and Statement of Claim, without any Certificate attesting to the allegation and the pleading having any proper basis. On 21 January 2008 the ninth respondent advised the then solicitors for the applicants that no Certificate had been filed and later requested that a Certificate be filed. Thereupon the previous solicitors advised that their instructions had been withdrawn and the present solicitors became the solicitors on the record. 5 On 19 February 2008 Baldwin Shelston, the ninth respondent, filed a Notice of Motion seeking summary dismissal and strike-out security for costs and costs on the Motion. On 4 March 2008 the first to sixth and the eighth respondents filed and served a Notice of Motion seeking summary dismissal of the proceeding or an Order striking out parts of the Statement of Claim. On or about 12 March 2008 the respondents were served with an Amended Statement of Claim, filed on 12 March 2008. Thereupon, on 26 March 2008, the first to eighth respondents filed and served an Amended Notice of Motion seeking summary dismissal or an Order striking out parts of the Amended Statement of Claim. 6 On 1 April 2008 the ninth respondent filed a similar Notice of Motion but also claimed Security for Costs. On or about 22 April 2008 the respondents were served with a Draft Further Amended Statement of Claim. The respondent's Motions were heard by me on 24 April 2008 and on that day the applicants sought to file a Further Amended Statement of Claim. The hearing on 21 November 2008 was conducted by reference to that Further Amended Statement of Claim. 7 On 28 May 2008 I made orders pursuant to the application for summary judgment by Baldwin Shelston and struck out the pleadings in relation to the conspiracy claim in the Trade Practice claim. I gave liberty to re-plead the case within 28 days. This leave was not taken up by the applicant. No further Draft Statement of Claim emerged until 20 November 2008, the day before the hearing of the present dismissal applications before me. 8 Also on 28 May 2008 I ordered that the applicants pay the costs of the strike-out application and the application for security for costs as thrown away by Amendments to the Statement of Claim and the Amended Statement of Claim. I also ordered that the applicant provide security for costs in the amount of $50,000 in respect of the first eight respondents and security in the amount of $50,000 in respect of Baldwin Shelston. I gave liberty to apply. 9 On 4 June 2008 Mr Hasson, solicitor for the applicants indicated that he was going to seek liberty to re-plead the case within 58 days but no such application was made. The matter was not re-pleaded. 10 No security has been provided to date and no satisfactory explanation or evidence has been given as to the reason why security for costs funding has not been provided. There is no evidence before me as to when and whether it is likely that any such security will be provided. 11 At the hearing on 21 November 2008, the first eight respondents indicated they no longer continue to press an application for summary dismissal, but pressed an application for security for costs against the first applicant. The ninth respondent pressed its application for summary judgment and strike out of parts of the Further Amended Statement of Claim. 12 When the matter came on before me for hearing Mr Hasson applied for an adjournment on the basis that his Counsel was otherwise engaged and that he had only been served with the documents on or about 17 November 2008. However, he filed no evidence in relation to the applications apart from tendering a letter. There was no cross-examination of the deponents to the respondents' affidavits, nor any evidence in response on behalf of the applicants in relation to the question of costs. 13 No reason has been provided as to why any Further Amended statement of Claim was not filed within 56 days from the Orders made on 28 May 2008. 14 The solicitors for the respondents wrote to the applicants' solicitors in June 2008 concerning the failure to provide security for costs and in the absence of any response filed a Notice seeking a Stay of Proceedings pending provision of security. As a result of subsequent correspondence, on 12 August 2008 the applicants' solicitors requested the first eight respondents consent to orders that the proceedings be stayed against the second applicant as well as the first applicant. The response of 19 August 2008 was that the fist eight respondents would be prepared to consent to Orders staying the second applicant's proceedings subject to the second applicant paying security for costs and that if the security had not been paid by 16 September 2008 the proceeding be dismissed. The letter was subject to a reservation of the respondents' right with respect to any strike-out application for want of prosecution. The prospect of a strike-out application was foreshadowed at that point. There was no response by the applicants' solicitors to the respondents' solicitors' letter of 19 August 2008. 15 On 8 October 2008 the applicants' solicitors wrote to the fist eight respondents' solicitors and informed them that the applicants had been unable to comply with the timetable set down in the Orders of 28 May 2008, and sought to re-list the matter on the first available date. In due course the matter was re-listed before me on 21 November 2008, in which time the respondents had taken out the applications to dismiss the proceedings with costs. The foreshadowed re-pleaded case was not indicated by the applicants' solicitors, as mentioned earlier, until the day before the hearing on 21 November 2008. 16 A draft document was handed to the parties by the applicants' solicitor on 20 November 2008 entitled "Second Further Amended Statement of Claim" (which is the fourth attempt to plead the matter). This document comprises 254 paragraphs and is some sixty-four pages in length. The extensive underlining of this so-called Amendment indicates the extent of the changes which comprise virtually the whole document. Among other matters it alleges conspiracy to defraud, intent to injure the applicants, fraud, bad faith, falsification of experimental results, dishonest conduct and aiding and abetting. These allegations were an integral part of the attempt by the applicants to formulate their case, and they are manifestly defective and do not comply with basic pleading requirements. They do not disclose any basis for any intelligible cause of action on their face. Many of the deficiencies were referred to in submissions before me by Senior Counsel for Baldwin Shelston, the ninth respondent.